Wolk Corporation Is a Highly Automated Manufacturing Firm What Is the Processing Cycle Efficiency (PCE) for This Order

question 103

Multiple Choice

Wolk Corporation is a highly automated manufacturing firm. The vice president of finance has decided that traditional standards are inappropriate for performance measures in an automated environment. Labor for this company is insignificant in terms of the total cost of production and tends to be fixed, material quality is considered more important than minimizing material cost, and customer satisfaction is the number one priority. As a result, delivery performance measures have been chosen to evaluate performance. The following information is considered typical of the time involved to complete customer orders. $\begin{array}{lr}\text { From time order is placed to time order received by manufacturing } & 10.0 \text { days } \\\text { From time order is received by manufacturing to time production begins } & 5.0 \text { days } \\\text { Inspection time } & 1.5 \text { days } \\\text { Process (manufacturing) time } & 3.0 \text { days } \\\text { Move time } & 2.5 \text { days }\end{array}$ What is the processing cycle efficiency (PCE) for this order (rounded to one decimal point, e.g., 34.721% = 34.7%) ?

• A) 25.0%.
• B) 13.6%.
• C) 37.5%.
• D) 69.2%.
• E) 33.3%.

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Definitions:

Indirect Flotation Cost

Expenses indirectly incurred by a company when raising new capital, such as underpricing or the costs associated with time and effort.

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Seasoned Stock Offering

A public offering of securities by a company that has previously issued securities to the public.